Suffolk University has appointed a new leader with a mandate to transform the Beacon Hill school.

The private school’s Board of Trustees tapped James McCarthy as its new president tonight, succeeding David Sargent, whose 21-year reign ended with his abrupt resignation in 2010 amid an outcry over his $1.5 million salary, one of the highest among college presidents nationwide.

McCarthy, 62, is currently provost at Baruch College in New York City. He will assume his new position on Feb. 1.

He faces challenges in bolstering Suffolk, which is at a critical juncture in its 106-year history. The school had boom years under Sargent, adding dormitories and increasing its geographic footprint.

But like many of its peer institutions, it now faces deep financial woes. A report by outside consultants obtained by the Globe says its classrooms need upgrading and its laboratories are “seriously outdated and dilapidated.” Last fiscal year, 97 percent of its income came from tuition plus room and board. Just 5 percent of alumni donate -- a statistic McCarthy said he was keen to increase.

McCarthy will also pursue other ways of increasing revenue and trimming unnecessary expenses, and the school is considering real estate possibilities that could save a large amount of money.

“When times get tough, there’s not a lot of wiggle room in places like Suffolk,” McCarthy said. “I don’t want to say it all comes down to resources, but an awful lot of it does. We’re serving the middle class, and we’re facing the same problems as the middle class.”

The school is also struggling to raise its academic profile. It accepts 85 percent of its undergraduate applicants and graduates only 55 percent within six years. And though its large law school has several nationally-ranked academic programs, it is not well known outside the Northeast, said its dean, Camille Nelson: “It’s a sleeping giant that needs to wake up.”

McCarthy expressed an interest in expanding the school’s online instruction, and also said some other academic offerings could be reformed.

Observers outside Suffolk who know McCarthy said they were confident in his abilities and eager to see the school turn around.

“Jim has been looking at how to bend the cost curve, which is a challenge for every college and university in America,” said Lawrence Bacow, a former leader of two major Boston-area universities who has worked alongside McCarthy to advance online education. “I’ve found him to be enormously thoughtful and creative, with a clear-eyed sense of how to push the ball down the field.”

Suffolk officials declined to reveal McCarthy’s pay but said it would be far less than Sargent’s. The university determined the amount by consulting both a compensation specialist and the Internal Revenue Service, which has been auditing the school for two years.

“This time, we attempted to be extraordinarily sensitive to our students, with the recognition that every dollar that gets paid to an individual ultimately comes from the students,” said Andrew Meyer, chairman of Suffolk’s board. “If you look at other institutions in Massachusetts, we’re going to be way down the list.”

Suffolk, which has an undergraduate enrollment of about 5,000, charges $29,894 for annual tuition and fees.

Before joining Baruch in 2007, McCarthy was dean of the School of Health and Human Services at the University of New Hampshire. A sociologist and demographer by training, he has also taught at Columbia University, Johns Hopkins University, and Trinity College in Dublin.